
	Year Ended December 31,
	2020		2019		2018
Research and development	$	37,198	$	19,374	$	13,115
Selling, general and administrative	67,872		37,228		27,511
Total stock-based compensation expense	$	105,070	$	56,602	$	40,626


	Year Ended December 31,
	2020		2019		2018
Stock options	$	19,863	$	23,422	$	18,896
Restricted stock units	35,675		26,056		19,569
Performance stock units	47,106		4,878		—
ESPP	2,426		2,246		2,161
Total stock-based compensation expense	$	105,070	$	56,602	$	40,626

We have several equity incentive plans under which we granted stock options and RSUs, including PSOs and PSUs, to employees and directors. At December 31, 2020, 17,100,727 shares were available for grant under the Exelixis, Inc. 2017 Equity Incentive Plan (as amended and restated, the 2017 Plan). The share reserve is reduced by 1 share for each share issued pursuant to a stock option award and 1.5 shares for full value awards granted in the form of RSUs or PSUs. On May 20, 2020, at our 2020 Annual Meeting of Stockholders, our stockholders approved the amendment and restatement of the 2017 Plan. The amendment and restatement increased the share reserve under the 2017 Plan by 21,000,000 shares, subject to adjustment for certain changes in our capitalization, which became effective immediately upon stockholder approval.

The Board of Directors (the Board) delegated responsibility for administration of our equity incentive plans to the Compensation Committee of the Board, including the authority to determine the term, exercise price and vesting requirements of each grant. Stock options granted to our employees and directors generally have a four-year vesting term and a one-year vesting term, respectively, an exercise price equal to the fair market value on the date of grant, and a seven-year life from the date of grant. RSUs granted to our employees and directors generally have a four-year vesting term and a

one-year vesting term, respectively. PSUs and PSOs granted pursuant to our equity incentive plans vest upon specified service conditions and the achievement of a performance target or market condition.

We have adopted a Change in Control and Severance Benefit Plan for certain executive officers. Eligible Change in Control and Severance Benefit Plan participants include employees with the title of vice president and above. If a participant’s employment is terminated without cause during a period commencing one month before and ending thirteen months following a change in control, as defined in the plan document, then the Change in Control and Severance Benefit Plan participant is entitled to have the vesting of all their outstanding equity awards accelerated and the exercise period for their stock options extended to no more than one year.

We have an ESPP that allows for qualified employees (as defined in the ESPP) to purchase shares of our common stock at a price equal to the lower of 85% of the closing price at the beginning of the offering period or 85% of the closing price at the end of each six month purchase period. As of December 31, 2020, we had 3,704,580 shares available for issuance under our ESPP. Pursuant to the ESPP, we issued 534,419, 483,009 and 330,492 shares of common stock at an average price per share of $14.55, $12.60 and $15.74 during the years ended December 31, 2020, 2019 and 2018, respectively. Cash received from purchases under the ESPP for the years ended December 31, 2020, 2019 and 2018 was $7.8 million, $6.1 million and $5.2 million, respectively.

We used a Monte Carlo simulation pricing model to value PSOs that include market vesting conditions and a Black-Scholes Merton option pricing model to value other stock options and ESPP purchases. The weighted average grant-date fair value per share of stock options and ESPP purchases were as follows:


	Year Ended December 31,
	2020		2019		2018
Stock options, including PSOs:
Risk-free interest rate	0.30	%	1.77	%	2.81	%
Dividend yield	—	%	—	%	—	%
Volatility	54	%	48	%	55	%
Expected life	4.4 years		4.3 years		4.4 years
ESPP:
Risk-free interest rate	0.79	%	2.16	%	1.93	%
Dividend yield	—	%	—	%	—	%
Volatility	52	%	50	%	53	%
Expected life	6 months		6 months		6 months

We considered both implied and historical volatilities in developing our estimate of expected volatility. The assumption for the expected life of stock options is based on historical exercise patterns and post-vesting termination behavior. The risk-free interest rate is based on U.S. Treasury rates with the same or similar term as the underlying award. Our dividend rate is based on historical experience and our investors’ current expectations.


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2019	20,443	$	9.91
Granted	1,637	$	21.89
Exercised	(5,633)	$	4.77
Cancelled	(318)	$	20.12
Stock options outstanding at December 31, 2020	16,129	$	12.72	3.1 years	$	131,729
Stock options exercisable at December 31, 2020	12,656	$	10.47	2.5 years	$	128,740

As of December 31, 2020, there was $27.1 million of unrecognized compensation expense related to our unvested stock options, including PSOs. The compensation expense for the unvested stock options will be recognized over a weighted-average period of 2.3 years.

During the year ended December 31, 2018, in connection with our long-term incentive compensation program, we granted 308,365 PSOs to our President and Chief Executive Officer. In addition to the standard service-based vesting conditions included in our other stock options, these PSOs contain a market vesting condition such that they may not be exercised until, at any time after the grant date, the closing market price of a share of our Common Stock is equal to or greater than 125% of the per share exercise price of the PSOs over a period of at least 30 consecutive calendar days. This market vesting condition was achieved during the second quarter of the fiscal 2020. The stock-based compensation expense for the PSOs is being recognized on an accelerated basis over the service period of the award, which commenced on the date of grant. The achievement of the market vesting condition did not impact the compensation expense recognized during the period.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2020 and the exercise prices, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all stock option holders exercised their stock options on December 31, 2020. The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $106.5 million, $54.1 million and $39.1 million, respectively. Cash received from stock option exercises during the years ended December 31, 2020, 2019 and 2018 was $26.9 million, $16.4 million and $12.1 million, respectively.


	Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2019	4,422	$	19.30
Awarded	3,053	$	23.49
Vested and released	(1,699)	$	18.20
Forfeited	(398)	$	20.25
RSUs outstanding at December 31, 2020	5,378	$	21.96	1.9 years	$	107,933


	Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
PSUs outstanding at December 31, 2019	4,379	$	19.33
Awarded	4,656	$	23.15
Vested and released	(1,529)	$	19.39
Forfeited	(128)	$	21.09
PSUs outstanding at December 31, 2020	7,378	$	21.70	3.5 years	$	148,076

During the year ended December 31, 2020, in connection with our long-term incentive compensation program, we awarded 2,327,840 PSUs (the target amount) that will vest upon the achievement of certain performance targets related to clinical trial positive top-line results and product approvals by the FDA (the 2020 PSUs). Pursuant to the terms of the 2020 PSUs, employees may earn up to 200% of the target amount, or 4,655,680 shares, depending on the volume and timing of achievement of the performance targets. The 2020 PSUs were designed to drive the performance of our management team and employees toward the achievement of key corporate objectives and will be forfeited if the performance targets are not met by December 31, 2024.

During the year ended December 31, 2019, we awarded 1,926,605 PSUs (the target amount) that vest upon the achievement of performance targets related to product approvals by the FDA (the 2019 PSUs). Pursuant to the terms of the 2019 PSUs, employees may earn up to 200% of the target amount, or up to an additional 1,926,605 shares relative to the target amount, depending on the volume and timing of achievement of the performance targets. The performance condition for early achievement of the 2019 PSUs occurred during 2020 representing 150% of the target amount. Employees have the ability to earn the remaining 50% of the target amount if the additional performance condition is met before December 31, 2021.

During the year ended December 31, 2018, we awarded 693,131 PSUs that vest upon the achievement of certain product revenue, late-stage clinical development programs and discovery pipeline expansion performance targets (the 2018 PSUs). The 2018 PSUs and 2019 PSUs will be forfeited if the performance targets are not met by December 31, 2021.

Expense recognition for PSUs commences when it is determined that attainment of the performance target is probable. Of the aggregate outstanding PSUs, 3,206,897 relate to awards for which we achieved the performance target or had determined that it was probable that we would achieve the performance target. As of December 31, 2020, the remaining unrecognized compensation expense for the PSUs achieved or deemed probable of achievement related to the PSUs was $11.8 million, which will be recognized over a weighted-average period of 3.5 years. The total unrecognized compensation expense for the PSUs for which we have not yet determined that attainment of the performance target is probable was $128.5 million as of December 31, 2020.